Gossamer Bio(GOSS) - 2022 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (unaudited) This section presents the unaudited condensed consolidated financial statements, detailing the company's financial position, operating results, and cash flows for the period Condensed Consolidated Balance Sheets As of September 30, 2022, total assets decreased to $323.5 million from $343.7 million, while total liabilities increased to $267.2 million from $222.2 million, primarily due to convertible senior notes, resulting in a significant decrease in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $153,477 | $183,403 | | Marketable securities | $150,906 | $141,815 | | Total Assets | $323,538 | $343,657 | | Liabilities & Equity | | | | Total current liabilities | $52,645 | $39,859 | | Long-term convertible senior notes | $195,496 | $150,038 | | Total Liabilities | $267,187 | $222,194 | | Total Stockholders' Equity | $56,351 | $121,463 | Condensed Consolidated Statements of Operations and Comprehensive Loss For the nine months ended September 30, 2022, the company reported a net loss of $173.6 million, a slight improvement from the prior year, with stable total operating expenses and decreased interest expense Statement of Operations Summary (in thousands) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Research and development | $129,411 | $129,335 | | General and administrative | $34,775 | $35,068 | | Total operating expenses | $164,236 | $164,463 | | Loss from operations | ($164,236) | ($164,463) | | Interest expense | ($10,423) | ($14,503) | | Net loss | ($173,614) | ($177,720) | | Net loss per share, basic and diluted | ($2.14) | ($2.38) | Condensed Consolidated Statements of Stockholders' Equity (Deficit) Stockholders' equity decreased from $121.5 million at year-end 2021 to $56.4 million by September 30, 2022, primarily due to net loss, partially offset by proceeds from a private stock offering - In the third quarter of 2022, the company issued 16,649,365 shares of common stock in a private offering, generating net proceeds of $119.9 million[19] - The accumulated deficit grew from $811.5 million at the end of 2021 to $976.5 million by September 30, 2022, reflecting ongoing net losses[19] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2022, net cash used in operating activities was $139.3 million, partially offset by $120.0 million from financing activities, resulting in a net decrease in cash of $30.0 million Cash Flow Summary (in thousands) | Activity | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($139,302) | ($148,381) | | Net cash used in investing activities | ($9,499) | ($127,870) | | Net cash provided by financing activities | $119,963 | $2,958 | | Net decrease in cash, cash equivalents and restricted cash | ($29,990) | ($273,082) | Notes to Unaudited Condensed Consolidated Financial Statements These notes provide detailed disclosures on the company's business, significant operating losses, capital sufficiency, accounting policy changes, and legal settlements - The company has incurred significant operating losses, with an accumulated deficit of $976.5 million as of September 30, 2022. Management believes current working capital is sufficient to fund operations for at least the next 12 months[27][28] - On July 15, 2022, the company completed a private placement of 16,649,365 shares of common stock, raising gross proceeds of approximately $120.1 million[72] - The company settled the Kuhne vs. Gossamer Bio, Inc. class action lawsuit, paying approximately $2.4 million. The court entered a judgment approving the settlement on September 30, 2022[92] - On January 1, 2022, the company adopted ASU 2020-06, which simplified the accounting for its 5.00% Convertible Senior Notes due 2027. This resulted in an increase of $44.8 million in the convertible senior notes liability and a decrease of $53.5 million in additional paid-in capital[34] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial condition and operational results, focusing on its clinical-stage programs, R&D expenses, and liquidity position - The company is a clinical-stage biopharmaceutical company focusing on seralutinib for PAH (Phase 2 topline results expected Q4 2022), GB5121 for PCNSL (Phase 1b/2 study commenced Q2 2022), and GB7208 for multiple sclerosis (preclinical)[97] R&D Expenses by Program (in thousands) | Program | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :--- | :--- | :--- | | Seralutinib | $43,326 | $34,695 | | GB5121 | $38,013 | $18,650 | | GB004 | $20,635 | $30,857 | | Other programs | $25,091 | $35,771 | | Other terminated programs | $2,346 | $9,362 | | Total R&D | $129,411 | $129,335 | - General and administrative expenses decreased by $0.3 million for the nine months ended Sep 30, 2022, compared to the prior year, mainly due to a $3.4 million decrease in legal costs from the 2021 securities class action settlement accrual, offset by increased personnel costs[122] - As of September 30, 2022, the company had $304.4 million in cash, cash equivalents, and marketable securities. Management believes these funds are sufficient to support operations into the second quarter of 2024[128][143] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company states that there have been no material changes to its market risk disclosures from those presented in its Annual Report on Form 10-K for the year ended December 31, 2021 - There have been no material changes in the company's market risk profile since the fiscal year ended December 31, 2021[148] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of September 30, 2022, the company's disclosure controls and procedures were effective at the reasonable assurance level[151] - No changes in internal control over financial reporting occurred during the third quarter of 2022 that have materially affected, or are reasonably likely to materially affect, internal controls[152] PART II. OTHER INFORMATION Item 1. Legal Proceedings This section refers to the discussion of legal proceedings in Note 9 of the financial statements, specifically the settled Kuhne vs. Gossamer Bio, Inc. class action lawsuit - The company refers to Note 9 of the financial statements for information on legal proceedings, specifically the settlement of the Kuhne vs. Gossamer Bio, Inc. lawsuit[155][92] Item 1A. Risk Factors The company reports that there have been no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2021 - There have been no material changes to the risk factors disclosed in the company's 2021 Annual Report on Form 10-K[156] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or issuer repurchases of equity securities during the period - The company reports 'None' for unregistered sales of equity securities and issuer repurchases of equity securities[157][158] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not Applicable[159] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not Applicable[160] Item 5. Other Information The company reported no other information for the period - None[161] Item 6. Exhibits This section provides an index of the exhibits filed or furnished as part of the Quarterly Report on Form 10-Q, including certifications by the CEO and CFO - The Exhibit Index lists all documents filed with the Form 10-Q, including Sarbanes-Oxley Act certifications and XBRL data files[162][165]